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Strategic embeddedness in supply chains: Network position and corporate M&A decisions

Author

Listed:
  • Li, Ni
  • Yu, Bichen
  • Wu, Jinlong
  • Kuang, Yingxu
  • Kong, Dongmin

Abstract

This study investigates how firms’ positions within supply chain networks influence mergers and acquisitions (M&A). Using Chinese A-share data and network metrics—centrality and structural holes—we find that firms in central or bridging positions are significantly more likely to initiate M&A. These results are robust across specifications, with stronger effects in moderately competitive industries and in growth- or maturity-stage firms. Mechanism analysis shows that network advantages ease financing constraints, lower transaction costs, and enhance deal efficiency, thereby improving firm value. Moreover, well-positioned firms are more inclined to pursue related and inter-regional M&A. Overall, the findings highlight the strategic role of supply chain networks in shaping corporate investment decisions.

Suggested Citation

  • Li, Ni & Yu, Bichen & Wu, Jinlong & Kuang, Yingxu & Kong, Dongmin, 2025. "Strategic embeddedness in supply chains: Network position and corporate M&A decisions," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325020914
    DOI: 10.1016/j.frl.2025.108837
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    References listed on IDEAS

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